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What is Breach of Fiduciary Duty? Definition and Examples of Fiduciary Duty in California

Defining fiduciary duty requires an understanding of what constitutes a fiduciary relationship.  In simple terms, a fiduciary relationship can be defined as one in which one party (Party A) in a transaction places their complete trust in another party (Party B) to act in the best interest of Party A.  More specifically according to California Civil Jury Instructions, a fiduciary relationship is “any relation existing between parties to a transaction wherein one of the parties is in duty bound to act with the utmost good faith for the benefit of the other party.”

In California, a fiduciary relationship begins once the fiduciary commences to knowingly act upon behalf of the other party (beneficiary), in their benefit.  With the fiduciary relationship established, the fiduciary in a relationship is required to:

  • Treat beneficiary with care and reasonable conduct
  • Remain open and honest with beneficiary when it comes to relevant information
  • Act in good faith, by putting the interests of the beneficiary above all personal interests.

Examples of Fiduciary Duty

Fiduciary duty applies in myriad fields and industries, and between countless individuals and/or corporations.  Fiduciaries in California owe the other party three main “duties.” These are duty to use reasonable care, duty of confidentiality, and duty of undivided loyalty.  Some of the more common examples of organizations and individuals owing fiduciary duty include:

  • Attorneys to their clients
  • Banks to their borrowers
  • Business partners (all parties have fiduciary duty to each other)
  • Controlling shareholders to minority shareholders
  • Corporations to their stockholders
  • Insurer to insured
  • Joint venturers (all parties have fiduciary duty to each other)
  • Pension fund trustee to pensioner beneficiary
  • Real estate agent to client
  • Spouse to spouse
  • Stockbroker to client
  • Trade unions to union members
  • Trustee to trust beneficiary

All of these fiduciaries (and many others) are legally obligated to act in the best interest of those who they are in fiduciary relationship with and honor the three duties owed to the other party.  Unfortunately, all too often fiduciaries do not uphold their end of the bargain and violate his or her obligations. Thus, a breach of fiduciary duty is said to occur. In California, the courts recognize that breaching fiduciary duty can be grounds for damages in a civil court.


Breach of Fiduciary Duty Lawsuits

If you believe that you have been the victim of breach of fiduciary duty, you may have legal recourse.  However, there are certain elements that must be proven in a breach of fiduciary duty claim, if you are seeking damages as a plaintiff.  These include:

  1. Proving that the fiduciary relationship existed
  2. Proving that the fiduciary breached their duty to plaintiff
  3. Proving that the breach caused harm to the plaintiff

If these elements can all be proven, as a plaintiff you are entitled to demand compensatory damages, and in many cases punitive damages.   As a defendant, you are entitled to launch a vigorous defense.

What to Expect in a Breach of Fiduciary Duty Lawsuit

As either the plaintiff or the defendant in a breach of fiduciary duty claim, it’s important to have realistic expectations about next steps.  The best way to arm yourself with information about the legal process is to consult with a top California complex business attorney, who can explain the nuances of your particular case, including options for litigation, reviewing arbitration agreements, and the possibility of settling the dispute out of court.

It is important to note that breach of fiduciary duty cases are frequently complicated with numerous parties involved.  As such, filing a claim, or defending a claim can be costly and last for months, if not years. If you believe you’ve been harmed as the result of breach of fiduciary duty, or that you’ve been falsely accused of breach of fiduciary duty, it is in your best interest to act swiftly, by contacting an experienced business litigation attorney as soon as possible.

If you have a dispute regarding a breach of fiduciary duty, it is smart to speak with a top-rated SoCal business attorney.  In many cases, breach of fiduciary disputes can be settled harmoniously without entering into litigation. If litigation is your only option, our Irvine based breach of fiduciary attorneys and trial specialists are here to help.


To schedule a consultation with award winning business litigation firm Brown & Charbonneau, LLP call 714-505-3000 today, or contact us online


Gregory Brown  

Founding Partner of Orange County, California based Brown & Charbonneau, LLP, Gregory G. Brown is a premier California trial attorney and Certified Trial Specialist, (a distinction earned by approximately 150 lawyers in California). For more than 30 years Brown has honed his trial and litigation expertise in the areas of contract actions, fraud and breach of fiduciary duty cases, trade secret litigation, trust litigation, commercial contract disputes, intellectual property disputes, unfair competition, false advertising, shareholder derivative actions, corporate litigation, complex dissolution actions, real estate & construction, personal injury and professional liability suits. Brown is also a graduate of the internationally renowned Strauss Institute for Dispute Resolution and the National Institute of Trial Advocacy.

Brown is AV-Preeminent rated by Martindale-Hubbell, maintains a “10/10 Superb” Avvo rating, and is a member of the American Board of Trial Advocates (ABOTA).  He has been selected for inclusion in Super Lawyers® each year since 2009 and has been named to the Best Lawyers annual list of the “Best Lawyers in America.” Brown has also been named to the prestigious Bar Register of Preeminent Lawyers since 1997.